Apologies for absence had been received from Councillor Dave Boulter and Councillor Yolande Watson.  Councillor Jenny Bartlett was unable to attend the meeting in person but participated via remote attendance.

To receive details any details of members nominated to attend the meeting in place of a member of the committee.

Councillor Graham Andrews attended the meeting as a substitute member for Councillor Boulter, and Councillor David Summers attended the meeting as a substitute member for Councillor Watson.

To receive declarations of interests in respect of Schedule 1, Schedule 2 or Other Interests from members of the committee in respect of items on the agenda.

Councillor Nigel Shaw, as a named individual in the Hereford City Centre Transport Package Summary Report and following advice from the Monitoring Officer, recused himself from the committee and left the meeting room for the items ‘Questions from members of the public’, ‘Questions from councillors’, and ‘Progress report on internal audit activity’.  Councillor Christy Bolderson chaired the meeting for the duration of these items.

To approve and sign the minutes of the meeting held on 12 April 2022.  The action log for the committee is also attached.The action log for the committee is also attached.

The minutes of the previous meeting were received.  An updated action log was published in supplement 2 to the agenda.

RESOLVED:

That the minutes of the meeting held on 12 April 2022 be confirmed as a correct record and be signed by the chairperson.

To receive any questions from members of the public.  

Four questions from members of the public had been accepted by the Monitoring Officer for this meeting and the related responses were published in supplement 2 to the agenda; no supplementary questions were received.

In response to a question, the Interim Head of Legal Services advised that it was usual practice that, unless the chairperson decided otherwise, no discussion took place on any question or a supplementary question.

To receive any questions from councillors.  

No questions from councillors had been accepted by the Monitoring Officer for this meeting.

[Note: To assist with the efficient transaction of business, the agenda items ‘Progress Report on Internal Audit Activity’ and ‘Auditor’s Annual Report 2020/21’ were considered before the agenda item ‘Re-thinking Governance’ but the original agenda order has been maintained in the minutes for ease of reference]

To consider the suggested amendments to the council’s constitution proposed by the re-thinking governance member and officer working group for recommendation to Council.

The Chairperson noted that the report suggested amendments to the council’s constitution, as proposed by the Re-thinking Governance Working Group, for recommendation to Council.  The committee considered the revised Part 3, Section 5 (Other functions) as shown at Appendix 1 to the report, the principal points of the discussion included:

1.           Amendments to paragraphs 3.5.11 and 3.5.13 were identified and, with clarifications provided by the Interim Head of Legal Services on the differences between an independent person as defined in paragraph 4.9.26 and an independent expert that could be appointed to the committee, it was suggested that a definition be provided in relation to the independent expert.

2.           The Interim Head of Legal Services advised that a chairperson of a committee could ask for an additional meeting to be added to the schedule of meetings if it was deemed necessary.

3.           An amendment to paragraph 3.5.15 (a) was suggested to enable the committee to not only receive material to examine but also in depth examine matters itself where required.

4.           In response to a question, the Director of Resources and Assurance explained the reference to a specific company in paragraph 3.5.19 (waste contract) was due to a PFI relationship.

5.           A typographical error was identified in paragraph 3.5.30 (i).

6.           It was noted that Treasury Management had been removed from the audit and governance functions and would be added to the remit of the Scrutiny Management Board.

7.           Noting the potential for confusion between audit and governance functions (paragraphs 3.5.9 to 3.5.25) and other functions in the document, the Interim Head of Legal Services suggested that the numbering and presentation be revisited in the further review of the constitution later in the year.

8.           With attention drawn to paragraph 3.5.11, it was noted that the committee was able to meet private and separately with the external auditor and head of internal audit if required.

9.           It was noted that changes to reflect the transfer of responsibilities to a different body (such as the transition from the Clinical Commissioning Group to the Integrated Care System) could be undertaken as technical amendments by the Director of Governance and Legal Services.

10.        An amendment to paragraph 3.5.14 was suggested to reflect the fact that a meeting could proceed with a quorum if the chairperson and vice-chairperson were not present, with a person elected to preside.

11.        With reference made to paragraph 3.5.18 (j), clarification was requested about the ‘caldicott guardian’.

Resolved: That

a)      having regard to the work undertaken by the Re-thinking Governance Working Group, the audit and governance functions as set out in appendix 1 and the two proposed changes to the constitution set out in paragraphs 9 and 10 of the report be recommended to full Council for adoption, with implementation with effect from 20 May 2022, subject to the following:

3.5.11         The words ‘as necessary’ be removed;

3.5.13         The final sentence of paragraph one be amended to ‘… The minutes of the meeting should  ...  view the full minutes text for item 93.

To recommend to Council a revised code of conduct.

The Chairperson noted that the Local Government Association (LGA) had issued the Model Councillor Code of Conduct and it was recommended that the code be adopted as amended to take account of local amendments, as set out at Appendix 3; the principal differences between the council’s existing code of conduct and the model code were set out at Appendix 4, this had been published in supplement 2 to the agenda.  It was also noted that town and parish councils may choose to adopt the principal authority’s code, to adopt the LGA model code, or make their own code.

The Chairperson reported that Councillor Liz Harvey had written to committee members before the meeting with detailed reasons to consider suggested amendments to the Guidance on Member Model Code of Conduct Complaints Handling, Appendix 2.

In response to questions from committee members, the Interim Head of Legal Services explained:

i.             the current process in relation to complaints and appeals;

ii.            the reasons why the LGA was recommending that no appeals should be heard as part of the internal process for determining code of conduct complaints;

iii.          that it was not proposed that the council should have a pre-assessment committee and the existing initial assessment stage, involving officers and independent persons, would be retained;

iv.          where matters could not be resolved by the Monitoring Officer, the arrangements for formal investigations and for referring matters to the Standards Panel;

v.           that the independent persons were split into two teams, with one team looking at the initial assessment and another which could be accessed by the subject member, but there could be an addendum to specify that the local arrangements would involve at least two independent persons;

vi.          the current lack of effective sanctions that could be imposed by monitoring officers;

vii.         the growing number of complaints about parish councils and the resource implications for the principal authority;

viii.       the process in Herefordshire had been shared with the Committee for Standards in Public Life and with the LGA; and

ix.          parish councils were encouraged to invite the principal authority to provide training on code of conduct issues and complaints.

The Chairperson, referring to the correspondence from Councillor Harvey, read out the suggested amendments to the section on Sanctions in the Guidance on Member Model Code of Conduct Complaints Handling; this is reflected in resolution b) ii) below.  The Interim Head of Legal Services detailed the reasons for the wording and confirmed that there was no impediment to Herefordshire Council adopting the guidance with local amendments, adding that it could not require parish councils to accept it.  The Chairperson noted the ongoing discussions between the government and the LGA, and the Interim Head of Legal Services summarised the recent responses of government to LGA recommendations.

In response to a comment from a committee member, the Chairperson drew attention to the local amendment identified in Appendix 4 to retain ‘any body … is not open to the public without formal membership’ in the ‘Other Registerable Interest –  ...  view the full minutes text for item 94.

To present to the audit and governance committee the auditor’s Annual Report 2020-21 for information and discussion.

The Key Audit Partner introduced the Auditor’s Annual Report, the principal points included:

i.             Narrative content had increased, reflecting the National Audit Office Code of Audit Practice 2020.

ii.            The final version was dated 11 April 2022, noting a national issue with the delivery of local authority audits.

iii.          The report was for 2020/21 but it was recognised that the council was making progress on various initiatives, with attention drawn to the changes and service improvements highlighted in the executive summary.

iv.          There were three key recommendations, in relation to Children’s Social Care Services (one) and Contract Management (two).  In terms of contract appointment and management arrangements with a dormant company, it was reported that Balfour Beatty Living Places Limited (BBLP) had been transparent with the council but the council itself had not constructed its contractual arrangements in such a way that reflected how BBLP and Balfour Beatty operated.

v.           There were fourteen improvement recommendations, in relation to improving economy, efficiency and effectiveness (five), governance (two), and financial sustainability (seven).

The responses of the Key Audit Partner to questions from committee members included:

1.           It was understood that the Audit Commission had been the external auditor when the contract was made with BBLP.

2.           In terms of improvement recommendation 8 and increasing the financial planning timeframe, it was commented that three years was a common period for a Medium Term Financial Strategy.

3.           There had been matters identified in Children’s Social Care Services in previous years and assurances received but the severity of the issue and the court judgement in 2021 had not been anticipated.  It was emphasised that this was an area of professional practice and auditors had to draw upon the work of specialised regulators in terms of the quality of the care arrangements in place.

The responses to other questions included:

4.           The Director for Resources and Assurance outlined the process for the consideration of recommendations by officers, the inclusion of management comments, the consideration of the arrangements by the Corporate Leadership Team and the allocation of work, reports being made to the executive where appropriate, and for external audit to check on delivery and to report back to the committee if necessary.

5.           The Public Sector Assurance VfM Specialist considered that a management comment, ‘The Council will review and improve the self-assessment document itself and ensure that it complies with the Council’s definition of a significant partnership.  The Council will also revisit the guidance issued for the reviewing of the self-assessment document.’, should address the improvement recommendation.  It was noted that there was an opportunity for officers to include narrative to explain the value of the significant partnerships.

6.           The Key Audit Partner noted that the committee may wish to seek further assurance in terms of the management responses to certain recommendations.  A committee member suggested an action in relation to major contracts.

7.           The Director for Resources and Assurance, declaring their position as a director of the company on behalf of the council currently, confirmed  ...  view the full minutes text for item 95.

To update members on the progress of internal audit work and to bring to their attention any key internal control issues arising from work recently completed.  To enable the committee to monitor performance of the internal audit team against the approved plan.  To assure the committee that action is being taken on risk related issues identified by internal audit.

The Assistant Director and the Principal Auditor of South West Audit Partnership (SWAP) introduced the Report of Internal Audit Activity for 2021/22, as of 21 April 2022, with attention drawn to the following:

i.             Since the previous update (minute 68 of 25 January 2022 refers), twenty-seven audits had been completed, bringing the total to fifty-two.  Details of the audits completed, with the assurance ratings and audit objectives were provided at pages 183-185 of the agenda pack.

ii.            Three audits were at draft report stage and eight audits were in progress; the aim was to complete five of those in progress for the annual opinion 2021/22, with the other three rolled over to the next financial year.

iii.          Sixteen priority 2 actions had been agreed across the following audits: Pool Cars; Disaster Recovery (ICT); Green Homes Grant: Local Authority Test and Trace Support Payment Scheme Funding Grant Determination; and Hereford City Centre Transport Package (HCCTP).  Summaries of the priority 2 actions were provided at pages 186-189 of the agenda pack.

iv.          No High Corporate Risks had been identified to date.

v.           Five follow up audits had been completed, with one priority 2 action (Accounts Receivable - Debt Recovery Policy and Reporting Processes) and three priority 3 actions in progress.

vi.          Thematic findings were highlighted in relation to data quality, procedure document / policy, and coding of grant income and expenditure; for the latter, further work had been undertaken and all the actions had been completed.

vii.         Two changes had been made to the internal audit plan 2021/22, reflecting requests for additional audits in relation to: South Wye Transport Package LEP Settlement; and Revenue Grant Determination (Ring-fenced) Protect and Vaccinate Grant Determination.  Consequently, the following audits had been deferred into the internal audit plan 2022/23: Schools Thematic Audit; and Condition Funding Grant Determination.

viii.       The HCCTP Summary Report was included at Appendix 2, agenda pages 211-223.  It was noted that this was a Special Investigation and one priority 1 action, eight priority 2 actions, and one priority 3 action had been agreed.  The key findings were detailed on page 212 of the agenda pack and were summarised at the meeting.  The Investigation Findings - Control Weaknesses and Agreed Actions was included at Appendix 3, agenda pages 225 – 235.

In response to questions and comments from committee members:

1.           The Principal Auditor said that clarification could be provided to committee members on the current position with unspent grant funding in relation to the Green Homes Grant.  Later in the discussion, the Director of Resources and Assurance commented on challenges in relation to identifying appropriately qualified contractors to deliver the service and the households wanting to have such works carried out within the narrow timeframes involved.

2.           The Principal Auditor confirmed that the scope of the additional audit was around the South Wye Transport Package LEP Settlement arrangements and commented on two previous pieces of audit work on the project and related follow up audits.  Later in the meeting, the Director  ...  view the full minutes text for item 96.

To consider the work programme for the committee.

The committee’s updated work programme was circulated, and further adjustments were reported in terms of external audit reports; with the 2021/22 External Audit Plan expected at the June 2022 meeting and the Auditor’s Annual Report expected by December 2022.

Further to Action 158 above, the Chairperson commented on the need to consider matters in relation to ICT business continuity and cyber security resilience.  The potential approach was discussed, and an assurance requested in the form of a briefing note initially.

In response to questions from a committee member about prioritisation, the Vice-Chairperson explained that the work programme was based on the audit and governance functions and the Chairperson commented on the need to accommodate matters of emerging change or risk.  It was also noted that the committee’s action log was reviewed regularly.

In response to a question about Action 103 in the committee’s action log (relating to the treatment of Section 106 monies for transport / highways being circulated to committee members), the Interim Head of Corporate Finance said that clarification would be provided on the timeline envisaged in relation to the progress update ‘Members will have their own projects in their wards and parishes which will be taken up individually with them by the Programme Management Office.’

RESOLVED:

That the updated work programme be agreed.

Action 162:     Further to Action 103 (relating to the treatment of Section 106 monies for transport / highways being circulated to committee members), clarification be sought from the Programme Management Office about the timeline for members to be contacted about projects in their wards and parishes.

The following dates for audit and governance committee meetings for 2022/23 are suggested for consideration:

Monday 27 June 2022, 2.00 pm

Monday 25 July 2022, 11.00 am

Monday 19 September 2022, 2.00 pm

Monday 31 October 2022, 2.00 pm

Monday 21 November 2022, 2.00 pm

Monday 30 January 2023, 11.00 am

Monday 13 March 2023, 2.00 pm

The dates for Audit and Governance Committee meetings for 2022/23 were confirmed.